Let’s talk about something that’s been hiding in plain sight: not all business loans are created equal. If you’re investing in businesses owned by women or people of color, the odds are that these enterprises are being charged higher interest rates, facing stricter collateral demands, or both. And not because of financial risk but because of systemic biases baked into lending practices.

A recent study from the University of Washington Foster School of Business confirms what many of us already knew: businesses owned by people of color and women pay significantly more for capital. In the U.S, Black-owned businesses, for example, face interest rates that are 3.09 percentage points higher than those given to white-owned businesses. Hispanic and Asian-owned businesses aren’t far behind, with hikes of 2.91 and 2.88 points, respectively. Women-owned businesses? They’re paying about 2.38 percentage points more than their male counterparts.

That might not seem like a big deal on paper, but in real dollars, we’re talking about an additional $8 billion in annual interest costs for minority-owned businesses alone. That’s $8 billion that could be reinvested in hiring, product development, marketing, or expansion. Instead, it’s disappearing into the abyss of unjustified interest rate markups.

The Bigger Picture

This isn’t just about individual businesses struggling under financial burdens. It’s about a system that’s actively slowing down innovation, economic mobility, and wealth creation in communities that already face significant barriers. For impact investors, this represents both a challenge and a huge opportunity.

Closing these gaps isn’t only the right thing to do but a smart investment strategy. The businesses that are being unfairly penalized by lending institutions are also some of the fastest-growing, most resilient, and most innovative enterprises out there. Investing in them is tapping into high-potential ventures that have historically been underestimated.

Where Do We Go From Here?

If we want to change the game, impact investors can take action at multiple levels:

• Advocate for equitable lending. Use your influence to push for fair credit assessment models and increased transparency in the lending process.
  
• Leverage alternative financing. Community development financial institutions (CDFIs), revenue-based financing, and direct investment can all help bridge the gap.
  
• Support businesses beyond capital. Funding is critical, but businesses also need strong branding, financial strategy, and positioning to scale effectively.

Building the Bridge to Better Capital Access

This is where strategic branding and positioning become essential. Businesses that clearly articulate their value, impact, and scalability are more likely to attract capital—whether from lenders or investors.

For impact investors, ensuring that the businesses you support are well-positioned isn’t just about optics—it’s about ensuring sustainable, long-term returns. A strong brand and message can be the difference between a business struggling to secure funding and one that thrives with investor backing.

The System Might Not Be Built for Them—But We Can Change That

By taking intentional steps toward equitable lending, smarter investment strategies, and stronger brand positioning, we can level the playing field. And that benefits not just individual businesses, but the entire economy.

Learn more about how branding and strategic positioning can drive impact at IconiQ Creative Group.